The Tier 1 Carrier, Tier 2 and Tier 3

What is the one of the most expensive and critical pieces in the CDN infrastructure? Of course, it’s bandwidth. Bandwidth is the variable cost component that increases as more more bandwidth is utilized. Although there are dozens of carriers offering IP Transit to CDNs at varying price points, not all carriers are the same. In fact, there is a vast difference amongst carriers in three key areas: the quality of the network, the foothold into the consumer market (last mile) and the amount of carrier investment in the network. The current system defining carriers based on Tiers, just doesn’t cut it.

The current definition of Tier 1 Network is any network that participates in the Internet via settlement-free peering. Based on this definition, this includes just about everyone, and ranks Cogent in the same category as an RBOC, such as Verizon. Let’s create a new system that ranks Carriers based on their size, network investment, quality of service, and access to the last mile consumer. The RBOC’s (regional bell operating companies) are the largest of the group generating tens of billions in annual revenue, have invested tens of billions in their networks, and offer last mile access to millions of consumers.

The Tier 1 Carrier, Tier 2 and Tier 3
Telco Tiers
Telco Tiers

With that being said, all three Carrier Tiers play a very important role in the ecosystem, as not everyone needs AT&T Internet bandwidth, as it is pricier. Also, prices increase for higher Tier Carriers. Tier 1 bandwidth is always the most expensive, but its also of the highest quality. More importantly, they offer direct access to the consumer. Here is a snapshot.

Tier based Ranking System for Carriers
  • Tier 1 Carrier – RBOCs that generate tens of billions in annual revenue, have invested tens of billions in their network, and have copper running into millions of consumer households
  • Tier 2 Carrier – One of the largest global network providers generating almost $10B in annual revenue, and has invested ten of billions in their network
  • Tier 3 Carrier – Carriers with smaller global footprint, generating revenue in the hundreds of millions of dollars, and with some networks being oversubscribed